Justia Legal Ethics Opinion SummariesArticles Posted in Legal Ethics
Schwartz v. Menas, Esq.
Consolidated appeals arose from two actions based on real estate development disputes. Plaintiffs sued their former legal counsel, two real estate developers, and executives employed by the developers, alleging that defendants’ tortious conduct deprived them of the opportunity to construct an affordable housing complex on a property in Monroe Township, New Jersey; a second development was planned for Egg Harbor. Plaintiffs had formed NJ 322, LLC with a developer to build a market-rate rental and commercial development on the property. Plaintiffs contended that defendants arranged to have the property rezoned so that only affordable housing could be built on it, at which time the developer withdrew and Plaintiff had no alternative but to sell the property. Plaintiffs’ damages expert prepared a report that included his opinion on “the profits that would likely have been earned by [p]laintiffs in the event that their development goals and objectives in connection with the development of the Project had not been frustrated” by defendants’ alleged conduct. The expert presented lost profits damages models for the development: the profit plaintiffs would have achieved if the development had proceeded as originally planned, and the profit had plaintiffs been the ones to construct the affordable housing project that was actually built. Based on the new business rule, the trial court granted defendants’ motion to bar testimony by plaintiffs’ expert in both cases. The Appellate Division affirmed in both cases. The New Jersey Supreme Court rejected a per se ban on claims by new businesses for lost profits damages, and it declined to follow Weiss v. Revenue Building & Loan Association, 116 N.J.L. 208 (E. & A. 1936) to the extent that it barred any claim by a new business for such damages. "Claims for lost profits damages are governed by the standard of reasonable certainty and require a fact-sensitive analysis. Because it is substantially more difficult for a new business to establish lost profits damages with reasonable certainty, a trial court should carefully scrutinize a new business’s claim that a defendant’s tortious conduct or breach of contract prevented it from profiting from an enterprise in which it has no experience and should bar that claim unless it can be proven with reasonable certainty." The Court remanded these cases so that the trial court could decide defendants’ motions in accordance with the proper standard. View "Schwartz v. Menas, Esq." on Justia Law
In re: Village Apothecary, Inc.
As special counsel, the law firm of Silverman & Morris recovered $38,000 for the estate in the Village Apothecary bankruptcy proceeding and requested $37,063 in fees. The bankruptcy court, finding that the benefit of the services did not warrant awarding the full amount, halved the award.The Sixth Circuit affirmed. Bankruptcy courts can consider “results obtained” when determining whether fees are reasonable under 11 U.S.C. 330(a)(3) and the bankruptcy court did not abuse its discretion in reducing the fees by half. In determining the amount of reasonable compensation to be awarded to a professional person, the court shall consider the nature, the extent, and the value of such services; section 330(a)(3) instructs the courts to “tak[e] into account all relevant factors, including” the time spent, rates charged, “whether the services were necessary . . . or beneficial at the time at which the service was rendered,” as well as other factors, including “results obtained.” Here, the “results obtained” were minimal. The law firm’s efforts to recover $1.6 million dollars resulted in only $38,000. Had the bankruptcy court awarded the law firm all its fees, it would have left virtually nothing for the estate. View "In re: Village Apothecary, Inc." on Justia Law
Simon v. Cooperative Educational Service Agency #5
In 2014, Cooperative, a Wisconsin-based governmental entity that services 35 public-school districts, hired Simon as an Alternative Program Lead Teacher at REACH Academy. Simon taught, managed paraprofessionals, developed integrated education plans, and communicated with parents, school districts, social workers, and law enforcement officials. In 2016, a student kicked a door into Simon’s head, which caused a concussion. Simon took Family and Medical Leave Act (FMLA) leave and was cleared to return to full-time work with no restrictions weeks later. Cooperative did not allow Simon to return to her previous position, having determined that doing so would present an “unreasonable risk.” Cooperative placed her in a support position with duties resembling those of a paraprofessional and requiring her to split her time between schools. Although Simon received the same salary and benefits in her new role, it involved significantly less responsibility, independence, and discretion.The district court found that Cooperative had violated the FMLA by not returning Simon to an equivalent position following her leave and that only declaratory—rather than injunctive—relief was appropriate based on Cooperative’s hiring trends, the unavailability of Simon’s previous role, and Simon’s new job elsewhere, and awarded Simon attorney’s fees of $59,773.62. The Seventh Circuit affirmed. The FMLA’s use of the term “equitable relief” encompasses declaratory relief. Simon suffered prejudice from Cooperative’s failure to return her to an equivalent position. The district court did not err in finding that attorney’s fees were available under the circumstances. View "Simon v. Cooperative Educational Service Agency #5" on Justia Law
Cousins v. Goodier
The issue this case presented for the Delaware Supreme Court's review centered on whether the First Amendment barred claims for defamation and tortious interference with contract against a defendant who, in an email to a law firm, described as “shockingly racist” a lawsuit filed by one of the firm’s partners in his personal capacity. The suit aimed to preserve a nearby high school’s “Indian” mascot. The partner, who claimed to have lost his position with the law firm because of the email, sued his detractor, contending that the characterization of his lawsuit was demonstrably false and pled four causes of action, including defamation and tortious interference with contract. The partner’s detractor, in response, contended her statements about the partner were opinions protected by the First Amendment’s Free Speech Clause. The Superior Court agreed with the detractor and dismissed the partner’s tort action. The Supreme Court agreed with the trial court: the statements at issue did not on their face contain demonstrably false statements of fact, nor did they imply defamatory and provably false facts. "As statements concerning an issue of public concern, moreover, they are entitled to heightened First Amendment protection and cannot form the predicate of the plaintiff’s tort claims." View "Cousins v. Goodier" on Justia Law
USA Gymnastics v. Liberty Insurance Underwriter, Inc.
Larry Nassar, who was affiliated with USAG, sexually assaulted hundreds of female athletes. After Nassar’s conduct was revealed, USAG faced multiple lawsuits and investigations. USAG and its insurers, including Liberty, litigated questions about insurance coverage in an adversary proceeding before a bankruptcy court. In a previous appeal, the Seventh Circuit affirmed the decision that Liberty had a duty to defend USAG. There were ancillary disputes over the amounts of attorneys’ fees that Liberty owed USAG. While an appeal was pending, USAG sought to enforce the order entitling it to reimbursement. Liberty resisted, asserting that large portions of the fees USAG claimed were not reasonable and necessary. The bankruptcy court recommended that the district court award USAG nearly all the requested fees. The district court adopted most of the bankruptcy court’s findings and entered judgment for USAG.The Seventh Circuit affirmed. The lower courts correctly concluded that USAG was entitled to a presumption that the fees it incurred were reasonable and necessary despite Liberty’s challenges to the nature of USAG’s supervision of outside counsel and the proportion of fees paid by USAG. The particular form of supervision suggested by Liberty and the policyholder’s full payment of all the fees it incurred are not prerequisites for that presumption. Liberty failed to rebut the presumption. View "USA Gymnastics v. Liberty Insurance Underwriter, Inc." on Justia Law
O’Neill v. SERS
Pennsylvania’s Public Employee Pension Forfeiture Act (“Act 140”) mandated the forfeiture of the pension of a public official or public employee when he or she was convicted of certain Pennsylvania crimes related to public office or public employment, or was convicted of federal offenses that were “substantially the same” as the forfeit-triggering state crimes. The Pennsylvania Supreme Court granted discretionary review to consider whether a federal conviction for false statements to a federal agent, 18 U.S.C. § 1001 was “substantially the same” as the Pennsylvania crime of false reports to law enforcement authorities, 18 Pa.C.S. § 4906, for purposes of Act 140. The Supreme Court concluded that the two offenses were not “substantially the same,” and, thus, the Commonwealth Court erred in affirming the forfeiture of the pension of Appellant, former Municipal Court of Philadelphia County Judge Joseph O’Neill. View "O'Neill v. SERS" on Justia Law
Office of Public Advocacy v. Berezkin f/n/a Smith et al.
The Alaska Supreme Court granted the Office of Public Advocacy’s (OPA) petition for review of whether counsel provided through Alaska Legal Service Corporation’s (ALSC) pro bono program was counsel “provided by a public agency” within the meaning of Flores v. Flores, 598 P.2d 890 (Alaska 1979) and OPA’s enabling statute. The Supreme Court concluded such counsel was indeed “provided by a public agency” and affirmed the superior court’s order appointing OPA to represent an indigent parent in a child custody case. View "Office of Public Advocacy v. Berezkin f/n/a Smith et al." on Justia Law
Kozal v. Snyder
The Supreme Court affirmed the judgment of the district court granting summary judgment in favor of in favor of Defendants and dismissing Plaintiffs' legal malpractice action on the grounds that Defendants did not breach any duty of care to Plaintiffs, holding that the district court did not err.In 2017, Plaintiffs, various liquor stores in Whiteclay, sought to renew multiple liquor licenses, but when the cause was appealed, the Supreme Court determined that it did not have jurisdiction. Plaintiffs then brought this action against their counsel, alleging legal malpractice. The district court granted summary judgment for Plaintiffs. The Supreme Court affirmed, holding that the district court did not err in concluding that, as a matter of law, Defendants did not breach the applicable standard of care. View "Kozal v. Snyder" on Justia Law
Arkansas Judicial Discipline & Disability Commission v. Bourne
The Supreme Court granted a petition sought by the Arkansas Judicial Discipline and Disability Commission for expedited consideration and report of uncontested sanction following its investigation of complaints against Pope County District Court Judge Don Bourne, holding that Judge Bourne's conduct warranted sanctions.Several complaints involving two counts were filed against Judge Bourne involving his conduct toward unrepresented litigants. Judge Bourne did not contest either count, waived a formal disciplinary hearing, and accepted the investigatory panel's recommended sanction of suspension without pay for ninety days, with seventy-five days held in abeyance for one year. The commission accepted the recommended sanction. The Supreme Court suspended Judge Bourne from the bench without pay for ninety days with seventy-five days held in abeyance if he agrees to, among other things, never again to hold judicial office after his current term expires, ordering that the mandate shall issue immediately. View "Arkansas Judicial Discipline & Disability Commission v. Bourne" on Justia Law
Duro, Inc. v. Walton
The Seventh Circuit affirmed the judgment of the district court concluding that the terms of a settlement resulted in a de facto assignment of a corporation's theoretical legal malpractice claim to Amit Shah by using the corporation as his alter ego, holding that there was no error.In 2013, Shah and another minority shareholder of Duro, Inc. brought this action against Duro and its third shareholder, alleging money laundering and racketeering. In 2015, Plaintiffs added a shareholder derivative claim of legal malpractice, nominally on behalf of Duro, against a law firm and its attorneys (May Oberfell), who had represented Defendants in the case. In 2017, Plaintiffs settled their claims, preserving any claims Duro might have against May Oberfell. Shah subsequently took effective control of Duro and transferred all of Duro's assets except the legal malpractice claim. Thereafter, Shah, through Duro, filed a complaint against May Oberfell. The district court granted summary judgment for May Oberfell, concluding that the legal malpractice claim had undergone a "de facto" assignment, and therefore, the claim was barred under Indiana law. The Seventh Circuit affirmed, holding that May Oberfell was entitled to summary judgment. View "Duro, Inc. v. Walton" on Justia Law